INVESTORS were betting on a counterbid for London Clubs International (LCI) last night after the company spurned Stanley Leisure to agree a higher offer from the owner of Caesars Palace, Las Vegas.
Shares in the group ended up 33¾p at 132½p after LCI, which operates casinos in London, Southend and Brighton, agreed a £279 million sale to Harrah’s, bringing an end to talks with Stanley Leisure, which had proposed a nilpremium merger.
The rise in the shares took the price above the 125p-a-share level that Harrah’s has agreed to pay, chiming with rumours that the deal could prompt a counterbid.
Matthew Gerard, an analyst at Investec, said that the valuation appeared high but he would not rule out a rival bid because of LCI’s pipeline of new casinos.
Harrah’s said that it was attracted to LCI by the group’s existing operations and planned new casinos. The group said that it would use LCI to underpin its expansion into Europe.
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The deal comes ahead of next year’s deregulation of the casino market, which will allow companies to advertise their sites. Analysts expect the weaker regulatory environment to boost attendance numbers significantly. The Harrah’s bid has the full backing of LCI’s directors. However, analysts noted that the company had not yet won irrevocable acceptances from any institutional shareholders.
Shares in Stanley Leisure ended up 38p at 656½p.